Running a limited company comes with a range of everyday costs, and many of these can be treated as allowable business expenses.
Understanding what your company can and can’t claim is an important part of managing your finances. Knowing the rules can help you keep accurate records, stay compliant with HMRC and make sure you’re not missing legitimate business expenses.
What counts as a business expense?
In most cases, an expense must be wholly and exclusively for business purposes.
Put simply, the cost must relate only to running your business and not provide a personal benefit.
If something is used for both business and personal reasons, you may only be able to claim the business element, or it may not qualify at all.
If you’re ever unsure, it’s always worth checking the latest HMRC guidance or speaking to an accountant before making a claim.
What are common business expenses?
The expenses your company can claim will depend on the type of business you run, but many businesses incur similar day-to-day costs.
Office expenses
Office expenses are often among the most common business costs. These can include:
- Stationery
- Office supplies
- Printing and postage
- Software subscriptions
- Business phone and internet costs
Provided they’re only used for business purposes, these costs can usually be claimed through your company.
Business travel
If you travel for work, some of those costs may also qualify. This can include:
- Flights
- Parking charges
- Train and bus fares
- Hotel accommodation for business trips
- Business mileage when using your own vehicle
However, travelling between your home and your usual place of work is generally treated differently, so make sure you understand the rules before making a claim.
Professional fees
Many companies pay for professional advice and services to help them operate effectively. This might include:
- Legal advice
- Accountancy fees
- Business banking charges
- Certain consultancy services
Where these services are purchased for business purposes, they’re often treated as allowable expenses.
Business insurance
Insurance is another cost many businesses need to consider. Depending on your circumstances, you may be able to claim:
- Public liability insurance
- Business contents insurance
- Professional indemnity insurance
Marketing and advertising
If you’re promoting your business, many marketing costs can also be claimed. Examples include:
- Business cards
- Online advertising
- Social media advertising
- Website design and hosting
- Printed marketing materials
These costs are generally allowable where they’re incurred to promote your business.
Business expenses and personal expenses: What’s the difference?
One of the most common mistakes new company directors make is mixing business and personal spending.
Company money shouldn’t be used for personal purchases, and personal expenses generally can’t be claimed through your limited company.
Keeping your business and personal finances separate will make bookkeeping simpler, reduce the risk of errors and make preparing your accounts much easier.
Keeping accurate records
Knowing what you can claim is only part of the process. It’s equally important to keep clear records.
Whenever your company pays for an expense, keep the receipt, invoice or any other supporting documents. This will help when preparing your accounts and provide evidence if HMRC ever asks you to justify a claim.
Many business owners also find it easier to record expenses as they arise rather than leaving everything until the end of the financial year.
Final thoughts
Understanding what your company can claim is an important part of running a limited company, but it’s equally important to make sure every expense meets HMRC’s requirements.
Keeping accurate records, separating business and personal spending, and reviewing the latest HMRC guidance when you’re unsure will help you manage your company finances with confidence.
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